Australia's PEP buys stake in biogas business from Sims

The private equity firm will execute the transaction under its secure assets strategy, which pursues opportunities that generate infrastructure-like annuity income yet offer opportunities for private equity-style operational improvement. PEP is currently raising its second secure assets fund. The target fund size increased from AUD 1bn to AUD 1.4bn at the start of this year.

As part of the deal, PEP will support up to AUD 200m in spending on growth initiatives across the bioenergy and methane abatement sectors in the US, New Zealand, and Australia, according to a filing.

LMS was founded in 1996 by the Falzon family and Sims first invested in the business in 2001 as part of a push into renewable energy. The decision to divest – announced in March – was driven by the company’s desire to focus on its core metal recycling operations.

Of the AUD 9.3bn in revenue generated by Sims in the 12 months ended June 2023, nearly 90% came from metal recycling. The company’s EBIT slumped to AUD 252.1m from AUD 756.1m, largely because of falling metals prices. The LMS contribution to underlying EBIT was AUD 14.5m.

Founded in 1996, LMS focuses on reducing emissions in hard-to-abate areas such as waste, agriculture, and mining.

LMS describes itself as Australia’s most experienced landfill biogas company. It operates 36 biogas-to-energy facilities, 26 biogas flaring facilities, and six solar projects. Each year, these generate approximately 600,000 megawatt-hours of renewable energy and abate over 4.5m tons of carbon equivalent from entering the atmosphere.

According to the LMS website, abating 4m tons of carbon is equivalent to taking 1.6m cars off Australian roads every year or planting 68m trees. About 15% of the country’s total emissions reductions under the national carbon credit scheme come from LMS projects.

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• Topics
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